Last week in District Court, Judge Koh dealt Apple another setback, vacating [PDF] more than 40 percent of the jury damages. She justified the decision to slash $450,514,650 USD from the verdict by pointing to two errors made by Apple, which the jury did not realize.

First, Apple encouraged the jury to calculate damages based on Samsung's profits. In reality that approach was only valid for the design patents. As many of the violations were for utility patents, Judge Koh found those damages invalid due to error.

Apple also goofed on the period it claimed damages on -- while Apple did notify Samsung of alleged violation of the "rubber band patent" (U.S. Patent No. 7,469,381, aka the '381 patent) (since ruled invalid) on August 4th, 2010, it did not notify Samsung of the other infringements until April 15, 2011, hence the period of infringement was shorter than Apple claimed.

Due to the errors, Judge Koh decided to simply eliminate the damages for many of the phones targeted, while declining Samsung's request to review the overall correctness of the jury verdict. Judge Koh argued it was too hard to determine why the jury ruled as they did; hence it would be inappropriate to modify their decision other than to correct the blatant errors.

She comments, "It is not the proper role of the court to second-guess the jury's factual determination as to the proper amount of compensation."

Samsung is now only on the hook for around $600M USD, a rather trivial amount given its record profitability. Samsung also appears in a strong position to appeal the verdict and possibly get the entire damages tossed in the appeals circuit, assuming the USPTO finishes off Apple's patents used in the case (which are currently past the early stages of invalidation).

Apple, on the other hand, will likely try to appeal the vacation. It faces an uphill battle in this case, though. It will likely try to focus on its upcoming second jury trial against Samsung, which will deal with newer products and a slightly different set of patents.

In response to the suit, Apple is looking to create a $23M USD settlement fund. The settlements will only apply to certain apps, and plaintiffs will have to fill out some paperwork.

Judge Edward Davila for the Northern California district court (where the case is being tried) expressed concern for the difficulty in obtaining a settlement, commenting, "It seems like you're asking the plaintiffs to do a lot. Apple has this information. They're in the best position to retrieve this information."

Parents sued Apple for making it too easy for children to make unauthorized in-app purchases.
[Image Source: Engadget]

Apple's lawyers countered, arguing that they were putting up a web app to make the settlement process less painful. Each unauthorized purchase will make the user eligible for a $5 USD refund as an iTunes gift card.

The company has modified iOS (via the iOS 4.3 update) in response to the suit. Originally, when you entered your password for in-app/App Store purchases, there would be large window in which you could freely make purchases without re-prompting for your password. That allowed some children to make large in-app purchases, even if they did not know their parent's credit card or iTunes password. Apple has since made the window for password timeout much shorter.

Nonetheless, there have been some unfortunate recent incidents, such as a 5-year-old from southwest England who spent $2,500 USD on his parents' credit card in unauthorized in-app purchases. The child did not have the password to the iPad. Apple has reportedly refunded the parent in the case.

Yeah, the fact that even the USPTO is finally starting to apply a little intelligence to the process tells you how far out of whack this whole thing is.

They've got to stop granting patents this bad in the first place. It's only leading to this type of legal quagmire and damaging US businesses, especially small business that can't afford to defend themselves in court for a living.